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Ireland, taxation and multinationals

Sir, - I was somewhat surprised to learn that Fintan O'Toole takes his policy views from US talk radio (I would have thought he was more a Guardian reader myself) but that probably explains why his view on foreign direct investment and Ireland's industrial policy is so out of touch with reality ("US taxpayers growing tired of Ireland's one big idea", Opinion amp; Analysis, April 19th).

The taxation of multinationals is based on the source principle. Countries tax the profits from operations located in their countries. Although some of the world's largest companies have operations in Ireland, we can only tax them on the profit they generate from their activities in Ireland. This we do.

The issue being debated in the US at the moment, however, relates to a loophole in the US tax code which allows "deferral" of corporate income taxes, and allows US multinationals to delay certain tax payments until the profits are transferred to US-incorporated entities in their corporate structure. Some companies (not surprisingly) are trying to defer payment for ever. We aren't the problem. The US tax code is. Indeed, the US treasury secretary has written to the European Commission stating that while the US does not collect the tax until repatriation, the US system of deferral "does not give EU member states the legal right to tax this income".

Ireland's 12½ per cent corporation tax rate is a key part of our offering to multinationals but it is not the only reason they come here. We offer access to EU markets, a well-educated and a highly skilled workforce. Winning the war for talent is critical to our future success. That is why my work as Minister of State for Skills, Research and Innovation was focused on making sure we continued to foster and develop Ireland's talent pool through a new innovation strategy and a new skills strategy.

I look forward to hearing Fintan explain the real facts of the matter to Rush Limbaugh or the good folks who listen to the News from Lake Wobegon. - Yours, etc,